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Sentiment Swerves

If we thought sentiment was shifting to the bull camp, today surely changed that. Let's look at breadth, bonds and gold.

The Market

Well, if we thought sentiment was shifting to the bull camp, it was heading there you might recall, today surely changed it. The clearest example I can offer is that the put/call ratio jumped to 1.21, the highest reading since Sept. 23.

I can also add that the Daily Sentiment Index for the S&P 500 is at 11 and Nasdaq is at 12 (I continue to be amazed that Nasdaq is not lower than the S&P). So another down day and these could get to single digits.

I could also note that bonds barely budged, ending the day essentially flat. Notice that the high yield bond fund (HYG) - Get Free Report still is not near that line I drew the other day.

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Breadth was bad but not horrible for such a huge down day. And, so far, the McClellan Summation Index is still heading up. Another day or two of poor breadth and it will halt the rise and might even turn south.

The Russell 2000 backed right off that 200-day moving average (as it should have) so now that resides overhead once again as clear resistance.

Now for the bad news. Nasdaq new lows pushed over 200, a number it had been sitting under for the last week, despite the pullback. The new lows are not soaring yet, but they did increase quite a bit.

And as you know, we are still short-term overbought. Despite the market being red for now five of the last six trading days, we are just not oversold.

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I have no idea why the Volatility Index did not budge today, but I noted earlier this week that I thought we’d be in for a volatile week and I still think that is true. I also think next week should bring us a bout of volatility.

New Ideas

Many weeks ago I was keen on some industrials. No one liked them then. In the last few days I have heard folks praise them, which is definitely not music to my ears. I would not be surprised to see Industrial Select Sector SPDR Fund (XLI) - Get Free Report come down to that $89-$90 area.

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I was asked about Chipotle Mexican Grille (CMG) - Get Free Report. It looks to me like that $1,350 area is the next support. I would get very concerned if it gapped under there.

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Today’s Indicator

The Volume Indicator is now at 50%, so it is definitely not oversold anymore. Overbought would be low- to mid-50s, but now the runway is short here.

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Q&A/Reader’s Feedback

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It might be too much to ask for Zoom Video (ZM:Nasdaq) to fill that gap should it get over $85, but if it can hold $80, then I would look for it to try to get into the gap.

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The gold exchange-traded fund (GLD) - Get Free Report continues to bounce along the bottom. And it continues to have resistance at that downtrend line. This week the line is at $158, but by the end of next week it will come in around $156, which is minor resistance. So right now I think it is going to $156-$158.

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I still think Union Pacific (UNP) - Get Free Report has too much resistance overhead to be bullish here. I think $205 is decent resistance. If it cannot get over $200 in the next few weeks that would be bearish.

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